Arm China's Board Voted 7 to 1 to Fire Him. He Kept the Company Chop.

On 4 June 2020, the board of Arm China voted 7 to 1 to remove Allen Wu as chairman and chief executive. Four directors had been appointed by Arm, so the seven-vote result necessarily reached beyond the British shareholder's own seats.²³¹⁵ Whatever the meeting's ultimate legal validity, this was not a lonely foreign investor shouting through a conference-room window.

Wu declined the decision.

He disputed whether the meeting had been convened properly. More importantly, he remained the legal representative in the government registry and retained the company's registration documents and chops, the physical seals used to express corporate authority. Arm announced replacement executives. Wu stayed in the office and continued running the business.²³ The board had won the vote. Wu had won Monday morning.

It took until April 2022 for Shenzhen authorities to register a replacement legal representative and issue a new business licence and company chop. Only then did the board's decision acquire the machinery needed to operate against the man it had voted to remove nearly 23 months earlier.⁷⁸

For founders and investors used to Delaware documents, the case exposes an uncomfortable category error. We tend to treat a valid decision and an executable decision as the same thing. In a Chinese operating company, they may live in different hands.

Arm China existed because Arm had deliberately separated its Chinese business from the parent. In June 2018, Arm agreed to sell 51% of its wholly owned Chinese subsidiary to a consortium of financial investors and ecosystem partners for $775.2 million. Arm retained 49%. The Chinese business had represented about 20% of Arm's revenue in the previous financial year, and Arm China would remain the route through which Arm technology was licensed to Chinese customers.¹

That ownership detail matters. Arm did not own Arm China outright when the fight began. It did own a large economic stake, supplied the intellectual property on which the venture depended and appointed four directors. The removal also had support from Hopu and enough other directors to produce the 7 to 1 result.³¹⁵ If a governance system cannot execute that coalition's decision, adding another paragraph about reserved matters is unlikely to rescue it.

Arm and Hopu said an investigation had found conflicts of interest and serious irregularities involving Wu. Wu's side rejected those allegations and argued that the 4 June meeting had not followed the required procedure, so its resolutions could not trigger a personnel change. Arm stood by the removal.² The underlying conduct remained disputed. The operational result did not. Wu's name stayed on the registry, his team controlled the company premises and corporate instruments, and the replacement executives did not take over.³

This distinction is easy to miss because a Western board resolution usually arrives with a strong supporting cast. Company secretaries update the records. Banks accept new mandates. Employees follow the announced reporting line. The removed executive returns the laptop, or at least starts negotiating over it. The law supplies authority, while a network of institutions quietly makes that authority real.

Arm China split the performance from the plumbing. The board could produce minutes. Wu controlled the things that made outsiders act on them.

The legal representative is a registered office under Chinese law, not a loose translation of chief executive. Article 13 of the PRC Company Law then provided that the chair, executive director or manager identified under the articles would serve as the company's legal representative, that the person would be registered and that a replacement would also have to be registered.⁴

Article 61 of China's General Provisions of Civil Law supplied the external consequence. The legal representative acts on behalf of the legal person in civil activities, and the company bears the legal consequences. Restrictions imposed by the articles or governing body generally cannot be asserted against a good-faith third party. The same legislation said that a mismatch between actual circumstances and registered information could not be used against a good-faith third party.⁵

Then came the administrative loop. When the standoff began, the company-registration rules required the legal representative to sign an application to change registered particulars. The application also needed the corporate resolution supporting the change. A company used its business licence to carve seals, open bank accounts and register for tax.⁶ The board had one required document. The person it was trying to replace controlled much of the rest of the submission stack.

That procedure was not a permanent signature veto. A new Market Entity Registration Regulation took effect on 1 March 2022 and simultaneously repealed the old Company Registration Regulation.¹⁴ By the time Shenzhen accepted Liu's registration in late April, the rulebook that had governed the opening phase no longer applied. The timing does not prove the legal change resolved Arm's case. It does show why a two-year dispute should not be compressed into the claim that Wu merely refused to stamp his own dismissal.

The company chop added a second channel of authority. A genuine corporate seal is routinely used on contracts, government filings and formal company communications. Separate financial, contract and invoice seals may govern narrower acts. The Supreme People's Court's 2019 commercial-judging minutes told courts to focus on whether the person applying a seal had representative or agency authority, rather than treating the seal's authenticity as conclusive. When a legal representative or authorised person applies the company seal, the company generally cannot escape the result merely by attacking the seal.¹³ The system is more complicated than whoever possesses one red stamp becoming king.

Possession does not transfer equity. It changes the cost of making equity useful. The holder can keep counterparties, staff and institutions dealing with the visible incumbent while the shareholders seek a new registration, invalidate old instruments or litigate for their return. Your cap table remains wonderfully accurate throughout.

This is a control wedge in unusually physical form. A small legal and operational credential controls a much larger economic position. The board resolution still matters internally and in court. The chop, registration and business licence determine how much pain arrives before the court catches up.

For almost two years, Wu remained in practical charge. Specialist reporting described him retaining Arm China's registration documents and chops, occupying its Shenzhen headquarters and resisting attempts to install replacement executives.³ The standoff mattered beyond the embarrassment. Arm relied on Arm China as its route to Chinese customers, while SoftBank was first trying to sell Arm to Nvidia and later preparing Arm for a public listing.⁸

The end arrived through the same machinery that had sustained the impasse. On 29 April 2022, Arm, Hopu and SoftBank announced that Arm China's board had unanimously appointed Liu Renchen and Eric Chen as co-CEOs. Liu had been accepted by Shenzhen authorities as the new legal representative and general manager.⁷ Reuters reported that the relevant agency issued Liu a new chop and business licence.⁸

Wu's side still disputed the change and said the registration process contained legal flaws. A letter posted through the Arm China WeChat account and said to carry more than 430 employee signatures continued to recognise Wu as leader.⁸ The new registration nevertheless changed which side could present government-issued credentials and a valid replacement seal to banks, employees and counterparties. The same board authority that had looked ornamental in 2020 now had an execution layer.

The dispute did not evaporate. Arm later disclosed that Wu and entities under his effective control had filed several PRC lawsuits from April 2022 challenging aspects of Arm China's governance and board actions. As of Arm's 28 April 2023 filing, it said every case resolved at trial level had favoured Arm China, while remaining subject to appeal.⁹ This is the less cinematic ending and therefore the more useful one. The registry change supplied the missing execution layer. Litigation continued to argue about whether it had been supplied correctly.

The popular version says Wu survived because he had the chop. That is close enough for a headline and too simple for diligence. He had a bundle: registry status, corporate documents, physical seals, premises, an operating team and continuity with the institutions that already dealt with the company. The shareholders eventually assembled a stronger bundle. Governance is often a contest between bundles while the articles pretend it is a flowchart.

Six weeks before the Arm China vote, another Chinese control fight made the role of seals impossible to treat as an obscure foreign-investment problem.

On 26 April 2020, Dangdang co-founder Li Guoqing entered the ecommerce company's Beijing office with several other people and removed its corporate and financial seals. Dangdang described the event as a break-in and reported it to police. Li said he was acting under shareholder and board resolutions that had installed him as chairman and general manager, and that he had given the custodian a receipt.¹⁰¹¹ The parties even disagreed over the verb, which is what happens when physical possession and corporate authority arrive in the same room with separate lawyers.

Dangdang's loss notice listed 47 seals across related entities: 11 corporate seals and 36 financial seals. The company announced that they were invalid and said it would not recognise documents stamped while the seals were outside its control.¹⁰ Two days later, Li used the corporate chop of Dangdang's main operating entity on personnel announcements appointing several executives and assigning his estranged wife and co-founder, Peggy Yu, responsibility for the company's charitable foundation. Dangdang called the announcements theatre and maintained that the seals had already been cancelled.¹⁰

The marriage and ownership dispute supplied the backdrop. They are not the joke. The institutional design is. A sophisticated ecommerce company discovered that its emergency control plane consisted of publishing a list of 47 missing stamps and asking the market to please disregard any management decisions they produced.

Li's possession of the seals did not settle who legally controlled Dangdang. The company could report them lost, seek replacements and challenge any purported action. That limitation makes the example more useful, not less. A seal is neither absolute authority nor harmless stationery. Courts examine the authority of the person who used it, while counterparties and staff still have to decide what to do before any court rules.¹³ Custody can create enough appearance of authority, operational disruption and evidentiary confusion to turn a shareholder dispute into a physical-security event.

Most cross-border diligence begins with ownership percentages, board composition, reserved matters and signatures on the articles. Those questions remain necessary. They answer who is entitled to decide. Add a second workstream that asks who can execute the decision locally.

• Who is the registered legal representative? Confirm the name against the official registry and business licence. Then read the articles to see which office supplies that role, who can remove the person and what documents the registry will require for a replacement.
• Who holds each seal? Inventory the company chop, contract chop, finance chop, invoice chop, legal-representative seal and any electronic seals. Record the named custodian, storage location, access controls and use log. "The China team has them" is a description of geography.
• Can one person control both authority channels? Avoid making the same executive legal representative, sole chop custodian and sole controller of the filing credentials. Split custody and approvals across people whose incentives do not collapse together during a dispute.
• Who controls the business licence and digital credentials? Map the paper and electronic business licences, SAMR account, tax systems, invoice system, customs access, social-insurance account, company email domain and mobile numbers used for verification codes.
• Who can move money? Review the bank's actual mandate, finance-chop custody, online-banking tokens, authorised signatories and callback contacts. A board policy requiring two approvals is decorative if the bank's portal recognises one local administrator.
• How does a hostile replacement work? Have Chinese counsel write the exact sequence for changing the legal representative, cancelling and recarving seals, replacing a business licence, changing bank mandates and recovering company property when the incumbent refuses to cooperate. Include likely time, evidence and forum. "We would sue" is the beginning of this answer.
• Has the process been tested? Run a tabletop exercise before funding or acquisition closes. Assume the legal representative will not sign, the seals cannot be recovered and the local team follows the incumbent. Identify which step fails first.

These controls need local legal advice. Chinese company law and registration procedures have changed since 2020, including a substantially revised Company Law effective from 1 July 2024, and the exact documents depend on entity type, articles, location and bank practice.¹² The evergreen principle survives the amendments: registered authority, physical custody and institutional access deserve the same diligence as voting rights.

Arm China's board did not lack votes. It lacked a way to make the next morning look different from the previous one.

Treat corporate control as a chain from legal entitlement to registry acceptance, physical credentials, financial access and human cooperation. Break it at any point and the person who lost the meeting may keep the company while the winner prepares exhibits.

Ask the inelegant question before the elegant ones: who is the legal representative, and where is the chop? If the answer is one person's name and one person's drawer, you have found the governance provision that actually matters.